Roger L. Thomas – 4/19/05

This page was last updated on April 22, 2005.

Bankruptcy bill is bad law; Roger L. Thomas; Beaver County Times; April 19, 2005.

Mr. Thomas’ letter of April 6^th also bashed bankruptcy law reform.

Below is a detailed critique of the subject letter.

“The new bankruptcy law (Senate Bill 256) is a disaster for American consumers. It’s a get-out-of-debt-free card for extortionists. It is bad law.

“As of now, all personal bankruptcies will be viewed as if they were the same. Bankruptcy law was deliberately designed under different chapters.”

“Some chapters required side payments to specific creditors while other, wage-earner chapters discharged all the listed debts.

“Now, wage-earner bankruptcy has been invalidated. No matter why consumers fall into bankruptcy, they can never discharge their credit debts. They must always make side payments to the lenders, even if the lender enabled their fatal indebtedness.”

[RWC] Not true. People with lower incomes will still have their debt wiped clean. Only those debtors above their state’s median income will be subject to partial restitution. Don’t take my word for it; check S.256 for yourself.

“The new law contains a presumption that the consumer fell into bankruptcy because of irresponsible credit card abuse. The lender has no burden to support this allegation. The consumer is presumed guilty of irresponsible behavior and has no forum to prove otherwise. The consumer is without remedy.”

[RWC] Why should the lender have a “burden” to prove anything other than it acted legally? Remember, it’s the borrower who is violating the contract.

“Fifty percent of personal bankruptcies are medical bankruptcies. Add the number of single moms who just endured a divorce and the number of people who filed because their jobs were outsourced and you approach 99 percent of the total.”

[RWC] Does anyone believe Mr. Thomas can cite a credible source for these claims?

Estimates are the new rules will recover only about $3 billion of the $40 billion vendors lose to personal bankruptcy. That’s only 7.5% of the total. That blows a hole in Mr. Thomas’ 99% claim.

“Thirty percent interest is usury, and violates more than just Leviticus 25:36. The new law encourages predatory lending, and gives extortionists a get-out-free card.”

[RWC] If you can’t afford the interest rate, don’t buy on credit. No one forces us to buy what we cannot afford.

“Get-out-free card?” As noted above, the new bill will recover only about 7.5% of current losses to bankruptcy.

“We lost at the federal level; now we must act through our state legislators.”

[RWC] Regardless of how a person gets to bankruptcy, he should not be allowed to transfer his debt to someone else. Remember, bankruptcy doesn’t eliminate debt; it only transfers the debt to other people. We – both the rich and poor – pay for transferred bankruptcy debt in the price of nearly every product and service we buy.